Euro zone consumers cut their near-term inflation expectations in May, according to a European Central Bank survey. The survey showed that consumers cut their price growth expectation for the next year to 3.5% in May from 4.0% a month earlier.

Inflation Expectations

Expectations for three and five years ahead were steady at 2.9% and 2.4% respectively. The ECB said that uncertainty about inflation expectations over the next 12 months decreased but remained at a higher level than before the start of the war in the Middle East.

Financial markets are pricing between one and two more rate hikes, with the next move not fully priced in until the autumn. Consumers also turned less pessimistic about growth prospects, predicting overall growth of minus 1.7% in the year ahead after seeing a 2.2% contraction a month earlier.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.